- Chicago futures are all in the red at midday. We have mentioned previously that, without USDA data, the market’s focus will be centered on S American weather and ongoing US-Chinese trade discussion. Much of the weather community doubts a needed lasting pattern shift will occur in S America prior to early February. But news is spilling out regarding a lack of progress between US and Chinese negotiators over the last week. IT, IP and company data are (still) the issues at hand. And there is still no concrete evidence of China buying US ag goods on top of the 5 million mt of beans already purchased. US Trade Representative Lighthizer this morning has bemoaned the lack of structural progress made on core issues. The next meeting between US and Chinese officials in late January is awaited.
- We do mention China now aims to cut taxes further and boost financing to small businesses to prevent further economic slowing. US trade representatives are still optimistic that a deal can be reached amid China’s recent economic struggles. A host of world ag markets are being hit today. Spot Canadian canola futures have found new contract lows. EU milling wheat futures in Paris look to settle €.75-1.00/MT ($.02-.03/bu) lower.
- NOPA-member crush in December totaled 171.8 million bu, roughly 2 million above expectations and record large for the month. Soy oil stocks at the end of Dec totaled 1,498 million lbs, well below expectations, and NOPA’s Jan report is viewed as supportive. Soy oil consumption remains enlarged amid decent biofuel margins.
- Gulf wheat’s discount to EU and Russia origin this evening will expand to $12-13/mt for Feb arrival. Black Sea corn basis continues to move upwards despite this year’s record production. We suspect the EU feedgrain market will absorb much of Ukraine’s enlarged surplus. The point is that fob price spreads, which do contribute to US export demand over time, favour the US as a major exporter into S America’s harvest. The US forecast is colder, and for a longer period of time. EU weekly guidance sustains well below normal temperatures into the first half of Feb. A major snow storm is scheduled Sat-Mon. Snow of 12+” will favour MO, IL, IN and OH.
- The midday GFS S American weather forecast is wetter in Central Brazil next week, but much drier thereafter. Confidence beyond the next week is low, but the GFS operational this morning suggests that a major and lasting pattern shift is unlikely. The long-established pattern returns in the 10-15 day period. Near complete dryness is offered to the bulk of Brazil’s soy belt, while yet more excessive rain impacts North/Northeast Argentina. Nearby, heat and dryness persists across Brazil into the weekend. Better rain chances move northwards into Mato Grosso and Goias next week, with accumulation there pegged at 1-3”. Heat and dryness returns Jan 26-31.
- The market lacks fuel amid the absence of export sales reporting. Traders clearly are highly sensitive to the evolution of US/China trade policies. We remain concerned about S America’s Jan/early Feb climate pattern.